TOKYO — Sri Lanka has reversed its earlier decision and decided to allow Chinese investment in a port development project near its capital, Colombo.

Situated off India’s southern tip, Sri Lanka serves as an important stopover on the sea trade route from Asia all the way to the Middle East.

Early last year, Sri Lanka decided to drop its pro-China policy out of fears over Beijing’s growing influence. Colombo’s flip-flop, however, may have grave ramifications for Japan, the U.S. and other countries in the Asia-Pacific region.

In recent years, Sri Lanka has drawn attention as a strategic vantage point militarily, as China plans to build a “Maritime Silk Road” trade route stretching from the South China Sea to the Indian Ocean, the Arabian Sea and finally the Mediterranean.

This vast body of water has so far been under the watch of the U.S. Navy, which is suspicious of Beijing’s motives. Thus, the Chinese government has been courting friendly nations along the planned ocean route to build port facilities as part of its efforts to secure a maritime route outside the U.S. sphere of influence.

For China, Sri Lanka is strategically significant as it is located right in the middle of the Maritime Silk Road.

The Sri Lankan government’s decision in mid-January to greenlight a stalled Chinese investment project came as a welcome surprise to China. A Chinese company plans to spend a total of about $1.5 billion to reclaim land off the coast of Colombo and build commercial, residential and sports facilities.

Initially, construction began in September 2014. However, the project stalled in March last year. The Sri Lankan government called for a halt and suspended the entire project, citing irregularities in the contract.

In response, a Chinese Foreign Ministry spokesperson expressed concern, saying, “The issue should be resolved in a reasonable manner.”